Special report: The discourse you rode in on!
PART 1—THE TWO DISCUSSIONS (permalink): By Sunday morning, the outlines of the debt limit deal were fairly clear. Within that context, a fascinating exchange took place between George Will and Paul Krugman.
The exchange occurred on ABC’s This Week. Let’s start with the things Krugman said.
Krugman spoke to the merits, or to the demerits, of the pending deal. On the merits, Krugman basically said the deal was no good. In this slightly snarky chunk, he explained the problems:
KRUGMAN (7/31/11): You know, from, from the perspective of a rational person—in other words, a progressive on this stuff—we shouldn't be even talking about spending cuts at all now. We have 9 percent unemployment. These spending cuts are going to worsen unemployment. That's not even—it's even going to hurt the long-run fiscal picture, because we have a situation where more and more people are becoming permanent long-term unemployed. And if you have a situation in which you're going to permanently raise the unemployment rate, which is what this is going to do, that's actually going to reduce future revenues.
So this, this thing, these spending cuts are even going to hurt the long-run fiscal position, let alone cause lots of misery. And then on top of that, we've got these budget cuts, which are entirely— Basically, the Republicans said, “We'll blow up the world economy unless you give us exactly what we want,” and the president said, “Okay.” That's what happened.
According to Krugman, the spending cuts in the new budget deal will make unemployment worse. In that way, the cuts will reduce future revenues, thus worsening the long-run fiscal picture.
To anyone who has followed Krugman, this (somewhat truncated) analysis wasn’t surprising. He has long said that we should engage in more stimulus spending now, that we shouldn’t address the long-term deficit problem until the economy is stronger. On Sunday, Christiane Amanpour cited this long-standing view, and Krugman spoke again:
AMANPOUR (continuing directly): You know, you've been consistent about this, saying that there should be no cuts at a time of recession and weak recovery. What is your scenario, though, once this goes through and there are significant spending cuts and no revenues?
KRUGMAN: We're looking— I mean, we used to talk about the Japanese and their lost decade. We're going to look to them as a role model. They did better than we're doing. We're, this is going to go on— I have nobody I know who thinks that the unemployment rate is going to be below 8 percent at the end of next year. With these spending cuts, it might well be above 9 percent at the end of next year. There is no light at the end of this tunnel.
And all the— We're having a debate in Washington which is all about, “Gee, we're going to make this economy worse, but are we going to make it worse on 90 percent of the Republicans' terms or 100 percent of the Republicans' terms?” And the answer is 100 percent.
Krugman opposed this new budget deal. In his view, the terms of this new budget deal will only “make this economy worse.” Moments later, he added a point. He has been consistent in these gloomy views, he now said:
KRUGMAN: One important point is to make that, is that people like me said in advance this wasn't remotely big enough. It's not an after-the-fact. It's not coming back afterwards. Right from the beginning, we looked, I looked at the numbers, people like me looked at the numbers, said we have, we're going to have huge cutbacks at the state and local level. You've got a federal increase which is going to be barely enough to limit those cutbacks. There is going to be no net fiscal stimulus, if you look at government as a whole, which is what happened.
So here we are.
The stimulus was never remotely big enough, Krugman said. Quite correctly, he also noted that he had said the same thing in real time. There is no doubt that this latter statement is accurate. In the first few weeks of Obama’s reign, Krugman was saying that the proposed stimulus package wouldn’t be large enough. Obviously, there’s no way to prove what would have happened with a larger stimulus plan.
In these exchanges, Krugman spoke to the merits, or to the demerits, of the new budget deal. In his Monday column, Krugman offered the same gloomy analysis. “[T]he deal itself, given the available information, is a disaster,” he wrote. “It will damage an already depressed economy; it will probably make America's long-run deficit problem worse, not better.”
Such predictions are hard to check, of course, especially given the comic-book discourse which rules our political culture. That in mind, it’s worth noting the way George Will responded to Krugman’s analysis on Sunday’s program. Krugman had addressed the merits of the deal, arguing that this is the wrong time to cut federal spending. After a brief attempt to argue the merits (see below), Will substituted a different order of reasoning. This is the full exchange which ended this discussion:
KRUGMAN: Can I just say, in advance— One important point is to make that, is that people like me said in advance this wasn't remotely big enough. It's not an after-the-fact. It's not coming back afterwards. Right from the beginning, we looked, I looked at the numbers, people like me looked at the numbers, said we have, we're going to have huge cutbacks at the state and local level. You've got a federal increase which is going to be barely enough to limit those cutbacks. There is going to be no net fiscal stimulus, if you look at government as a whole, which is what happened.
So here we are.
WILL: It would be good to go to the election, electorate and have a Krugman election this time, saying, “Resolved, the government is too frugal. Let's vote.”
That was Will’s full rebuttal. Amanpour made no attempt to referee this dispute; at this point, she simply moved to a different question. In effect, Will abandoned any attempt to argue this matter on the merits. Instead, he basically said the following:
The voters wouldn’t agree with Krugman. If we built an election around these claims, Krugman’s side would lose.
Krugman had argued the merits of the deal; Will responded with a claim about the politics. He didn’t say Krugman was wrong on the merits. He simply said the voters would judge that Krugman was wrong.
A person might claim that Will was being cynical. He made little attempt to dispute Krugman’s substantive claims; he simply said the voters would disagree. In fairness, though, we must say the following:
It certainly isn’t clear that Will’s assertion is wrong.
Krugman was presenting some very basic economics. It can’t be proven that his claims are right, but his claims are quite basic. And yet, within the gong-show discourse churned by America’s political press corps, Krugman may as well have been speaking from Mars, in the Martian language.
Krugman was making some very basic points. But you live in a country which enjoys a banana republic discourse. Krugman’s very famous newspaper is an obvious, rather large part of the problem. This helps explain an unfortunate fact:
Like Krugman, Will was probably right in the things he said.
Tomorrow—part 2: That CNN poll
Will on the merits: Will made a brief, very modest attempt to argue the case on the merits. In this passage, you see what he said after Krugman cited Japan:
KRUGMAN: We used to talk about the Japanese and their lost decade. We're going to look to them as a role model. They did better than we're doing. We're, this is going to go on— I have nobody I know who thinks that the unemployment rate is going to be below 8 percent at the end of next year. With these spending cuts, it might well be above 9 percent at the end of next year. There is no light at the end of this tunnel.
And all the— We're having a debate in Washington which is all about, “Gee, we're going to make this economy worse, but are we going to make it worse on 90 percent of the Republicans' terms or 100 percent of the Republicans' terms?” And the answer is 100 percent.
WILL: Paul's right. We are a third of the way through a lost decade, but we're a third of the way after TARP, the stimulus, Cash for Clunkers, dollars for dishwashers, cash for caulkers, the entire range of stimulus, the Keynesian approach, which by its own evidence simply hasn't worked. Now Paul says double down.
It was at this point that Krugman noted an accurate fact—he always said the stimulus would be too small. At this point, Will abandoned the merits, arguing—correctly, we’d have to guess—that the voters wouldn’t agree with Krugman’s viewpoint.
What do the voters currently think? On to that topic tomorrow.
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